Pay-Per-Call Rulemaking: Post Workshop Supplemental Comments, FTC File No. R611016 #7

Submission Number:
7
Commenter:
Albert Angel
Organization:
Billing Reform Task Force
State:
VA
Initiative Name:
Pay-Per-Call Rulemaking: Post Workshop Supplemental Comments, FTC File No. R611016

BILLING REFORM TASK FORCE
c/o FFL, 2111 Wilson Blvd. Suite 700, Arlington VA 22201
Phone: 703-351-5070, Fax: 703-351-6218

June 4, 1999

BY HAND DELIVERY

Mr. Donald Clark
Secretary
Federal Trade Commission
Room 159
Sixth & Pennsylvania Avenues, NW
Washington, DC 20580

Re: Supplemental Information Filed in Response to the Federal Trade Commission's Pay-Per-Call Rule Revision Public Workshop, FTC File No. R611016

Dear Mr. Clark:

As a follow-up to the Commission's pay-per-call workshop held on May 20-21, 1999, the Billing Reform Task Force ("BRTF") wishes to supplement the record with certain additional information responsive to issues raised during the workshop. Enclosed with this original are six copies of this letter. Please distribute one of these copies to Eileen Harrington of the Commission's Division of Marketing Practices, and the others to Carole Danielson, also of the Division of Marketing Practices. Also enclosed is a computer diskette containing a copy of this letter in WordPerfect 6.0 format.

1. Billing Notices. On May 20th, a sample billing notice that was prepared by the BRTF was circulated for consideration by the workshop participants (see Attachment A). During the discussion that ensued, the National Consumers League ("NCL") and local exchange carriers ("LECs") expressed some concerns with the sample notice. In response to these concerns, the BRTF has prepared a revised billing notice that incorporates suggestions made at the workshop (see Attachment B). The BRTF urges the Commission to sanction the use of the revised language included in Attachment B as a safe harbor that would be deemed compliant with the FTC's billing notice disclosure requirements. In considering this matter, three points bear emphasis:

First, Attachment B is only a sample notice that could be used as a safe harbor to ensure compliance with the FTC's billing notice disclosure rule. As workshop participants testified, greater uniformity among billing notices should help consumers, and make consumer education programs more effective. While the BRTF is hopeful that the establishment of a safe harbor will lead to more uniformity in billing notices, the BRTF is not suggesting that the Commission mandate the use of this language.

Second, Attachment B is drafted to cover only 900-number services. Because the FCC already requires segregation and specific disclosures on every bill that includes 900-number charges, it should not be costly or difficult to mesh the FTC's proposed disclosures requirements (and the minor amendments proposed by the BRTF) with the FCC's existing requirements. It should be noted, however, that if the FTC goes forward with its proposal to extend its disclosure requirements to a broad category of "telephone-billed purchases," the safe harbor language proposed in Attachment B would be applicable only to 900-number services.

Third, if the Commission ultimately decides to reject the concept of establishing safe harbor language for billing notices, it should at least adopt the minor rule change proposed by the BRTF to Section 308.20(m) (copy attached as Attachment C). Significantly, the NCL is willing to support the BRTF's rule change with one minor amendment. The NCL would like the proposed rule change to read as follows:

(iv) that if it is determined that no billing error occurred, the consumer may be precluded from further access to 900-number and other non-communications services, and the affected service provider has the right may choose to pursue collection of the disputed charges and report the customer's failure to pay such charges to credit reporting agencies.

2. Industry Database. The Commission staff raised many legitimate questions about the proposed industry database to combat high chargebacks. Although the details remain to be worked out, the industry needs some assurance that the establishment of a database would not violate the 900-Number Rule. Thus, the BRTF proposed an amendment to Section 308.20 that would give the industry the assurance it needs while, at the same time, ensuring that consumers' rights will be protected (a copy of the BRTF's proposed amendment is included as Attachment D).

As an alternative to the BRTF's proposed amendment, the Commission could clarify (in the text accompanying the final 900-Number Rule, or preferably, in a separate letter ruling issued in advance of the final 900-Number Rule) that the general principle of establishing an industry database to combat fraudulent consumer chargebacks would not violate the 900-Number Rule as long as appropriate consumer safeguards are in place.

Once the Commission clears the way for an industry database, the BRTF will work with the Commission staff, NCL and other groups to address individual privacy, credit reporting, and other concerns. Ultimately, the database could prove to be a useful tool for organizations that may want access to some, but not all, pay-per-call services. For example, colleges may want to permit students to access computer hardware and software support services offered through 900 numbers, but restrict access to other 900-number services. In implementing the database, the BRTF would look to existing models, such as the system used by banks to screen for customers who habitually write bad checks.

The BRTF is eager to move forward with this project, but has not wanted to spend the time and resources to do so without some assurance from the FTC. If such an assurance is given, the BRTF would begin developing plans for the database, and seek the continued input of the FTC staff and consumer groups, both for their particular expertise and to ensure their continued support of this undertaking.

3. Economic Study. During the workshop, questions were raised concerning alternatives to LEC billing for 900-number services. This is an issue of critical importance to the BRTF. The BRTF believes that there are no viable alternatives to LEC billing for 900-number services. To compile pertinent data, the BRTF has hired a prominent economic consulting firm, Economists Incorporated, to prepare a study on this issue. We anticipate that the study will be complete by the end of June. The BRTF plans to submit the study to the Commission upon its completion, and asks that the Commission include the study in the record of this proceeding.

Thank you for the opportunity to submit these supplemental comments. We look forward to continuing our dialogue with the FTC staff on these issues.

Respectfully Submitted,

THE BILLING REFORM TASK FORCE

By: ____________________________
Albert Angel
Co-Founder

ATTACHMENT A

CONSUMER BILLING NOTICE

This bill contains charges for calls from your phone to 900 numbers that provide information and/or entertainment, which are non-communications services. If you wish to dispute any specific 900 charges that appear on this bill, please call the number at the bottom of the itemized bill page. To be guaranteed the protections provided under the Dispute Resolution Procedures of the Federal Trade Commission's Rule Concerning Pay-Per-Call Services and Other Telephone-Billed Purchases, you must call no later than 60 days after we sent you the first bill on which the disputed charge(s) appeared.

Neither your local nor long distance service (including access to emergency services) will be disconnected if you do not pay the disputed charges. Even if the disputed charges are removed from your bill, the 900 service provider has the right to pursue the collection of these disputed charges. Also, if you do not pay legitimate charges, your ability to obtain non-communications services and to make 900 calls from your line may be blocked.

Your failure to pay undisputed charges timely may be reported to a third party credit reporting agency, which may adversely affect your credit. You can call your local telephone company to have 900 calls blocked from your line.

You will not be reported as delinquent and no action to collect the amount you questioned will be taken until an investigation of your dispute is completed. Although you do not have to pay any amount in question during the investigation, you are still obligated to pay the parts of your bills that are not in question.

Underline = FCC's existing disclosure requirement

Italic = FTC's proposed disclosure requirement

Bold = BRTF's proposed disclosure requirement

ATTACHMENT B

SAMPLE
CONSUMER BILLING NOTICE
(Proposed Safe Harbor)

This bill contains charges for calls from your phone to 900 numbers that provide information and/or entertainment, which are non-communications services. If you wish to dispute any specific 900 charges that appear on this bill, please call the number at the bottom of the itemized bill page. To be guaranteed the protections provided under the Dispute Resolution Procedures of the Federal Trade Commission's Rule Concerning Pay-Per-Call Services and Other Telephone-Billed Purchases, you must call no later than 60 days after we sent you the first bill on which the disputed charge(s) appeared.

Neither your local nor long distance service (including access to emergency services) will be disconnected if you do not pay the disputed charges. Even if the disputed charges are removed from your bill, the 900 service provider may choose to pursue the collection of these disputed charges. Also, if you do not pay legitimate charges, your ability to make 900 calls and purchase non-communications services from third-party vendors on your phone line may be blocked.

If you fail to pay legitimate 900 charges on a timely basis, the provider of the services may report it to a credit-reporting agency, which may adversely affect your credit. You can call your local telephone company to have 900 calls blocked from your line.

You will not be reported as delinquent and no action to collect the amount you questioned will be taken until an investigation of your dispute is completed. Although you do not have to pay any amount in question during the investigation, you are still obligated to pay the parts of your bills that are not in question.

Underline = Language that addresses FCC's existing disclosure requirements

Italic = Language that addresses FTC's proposed disclosure requirements

Bold = BRTF's proposed additional language

ATTACHMENT C

BRTF Proposed Amendment to Proposed Section 308.20 (m)
Comparison of FTC's Proposed Rule to BRTF's Proposal

(Text recommended for deletion is indicated with a strikeout; text recommended for addition is printed in bold.)

(m) Notice of billing error rights-- (1) Billing Notice. With each billing statement that contains charges for a telephone-billed purchase, a billing entity shall include a statement that sets forth the procedure that a customer must follow to notify the billing entity of a billing error. The statement shall also disclose (i) the customer's right to withhold payment of any disputed amount; (ii) that any action to collect any disputed amount will be suspended, pending completion of the billing review; and (iii) that, to be guaranteed the protections provided under the Dispute Resolution Procedures of the Federal Trade Commission's Rule Concerning Pay-Per-Call Services and Other Telephone-Billed Purchases, a customer must initiate a billing review no later than sixty (60) days after the billing entity transmitted the first billing statement that contains a charge for such telephone-billed purchase; and (iv) that if it is determined that no billing error occurred, the consumer may be precluded from future access to 900-number and other non-communications services, and the affected service provider has the right to pursue collection of the disputed charges and report the customer's failure to pay such charges to credit reporting agencies.

ATTACHMENT D

BRTF Proposed Amendment to Proposed Section 308.20 (l)

Comparison of FTC's Proposed Rule to BRTF's Proposal
(Text recommended for addition is printed in bold.)

(l) Retaliatory actions prohibited. A billing entity, providing carrier, vendor or other agent may not accelerate any part of the customer's indebtedness or restrict or terminate the customer's access to pay-per-call services solely because the customer has exercised good faith rights provided by this Section. Nothing in this Section shall preclude a billing entity, providing carrier, vendor or other agent from utilizing information maintained in an industry database to restrict, block or terminate a customer's access to pay-per-call or other non-communications services on the basis of information which shows that the customer has repeatedly requested credits for legitimate charges, as long as such a database is established with appropriate consumer safeguards and is administered in a manner that complies with other applicable federal and state laws, including those governing consumer privacy, security, and credit reporting.